Ice cream manufacturers reel under losses as demand, sales plummet

The industry is now pinning its hopes on government intervention in form of a soft loan scheme to help it tide over the crisis.

For the second year in a row, the ice cream industry in India has incurred huge losses with sales plummeting to a record low due to a significant dip in demand and curbs imposed to rein in Covid-19 infections. The industry is now pinning its hopes on government intervention in form of a soft loan scheme to help it tide over the crisis.

Pegged at Rs 15,000-20,000 crore, the industry registers around 70 per cent of its sales in the summer months – from March to September.
Insiders said while the months of March and April were still optimistic, May has been a complete wash out for the industry.
Rajesh Gandhi, former president of the Indian Ice Cream Manufacturers Association (IICMA), said the industry has not seen even half of its normal sales volumes in the period. With state going into a lockdown from April with the second surge, sales tanked further.

RS Sodhi, managing director of the Gujarat Cooperative Milk Marketing Federation, which sells dairy products under the brand Amul, said the cooperative giant has reported around 70 per cent dip in its ice cream sales.

Gandhi said that back-to-back year of losses has shaken the foundations of the industry. “We have petitioned the government for relief measures like a reduction in GST rates and extension of a soft loan for the industry to survive,” he said.
Dairy farmers too are reeling under financial losses with dip in consumption and milk production. Farmers who were paid Rs 27-30/liter for milk with 3.5 per cent fat and 8.5 per cent SNF (solid not fat) at the start of March, are now being paid Rs 23-25/litre.

Also, prices of skimmed milk powder (SMP), the commodity which the dairies trade both in national and international markets, have seen a downward correction.

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Once trading at Rs 250/kg, SMP is now trading at Rs 190-210/kg even as the international market continues to be bullish. For example SMP prices on Globaldairytrade, the online auction platform operated by New Zealand’s dairy giant Fonterra, has auctions touching a 5-year high of $3,447/tonne on May 18.

India, at this moment, has around 1.70 lakh tonnes of SMP, mostly with the cooperatives.

Dasarath Mane, chairman and managing director of Indapur-based Sonai Dairy, expressed hope that milk procurement prices would again firm up once the restrictions would be eased out from June. “Milk is short in supply so once consumption goes up, we shall again see farmers getting good prices,” he said.

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